The Government announced that Service Tax is reintroduced on 1 September 2018 by substituting the prevailing Goods and Services Tax (“GST”). Unlike GST which taxes all goods and services unless exemption is provided, Service Tax is only charged on certain prescribed services made by prescribed taxable persons.

Life insurance policy or family takaful contract sold to an individual is not a taxable service and hence, the premium or contribution is not subject to Service Tax. However, life insurance policy or family takaful contract sold to a business organisation is a taxable service and hence, the premium or contribution is subject to Service Tax at 6%. There will be no issuance of new policy/contract.